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Top UK clubs under fire

2009-04-20 15:32

London - Heavily indebted Premier League clubs Manchester United, Chelsea and Liverpool were accused by a British parliamentary committee Monday of engaging in "financial doping."

Among 27 recommendations at the end of a yearlong inquiry, legislators urged England's football authorities to curb "ludicrous levels of borrowing" and the use of profits to service large debts.

The All Party Parliamentary Football Group, which has no power to push through any changes, is calling for a rule change to enforce heavy scrutiny of business plans ahead of any club takeovers, echoing the agenda of world governing body FIFA.

The group also backed FIFA's "six-plus-five rule" that would impose limits on foreign players, urging the British government to lobby the European Union to overlook its treaties on free movement.

The key warning in the report is that while football appears to be weathering the initial impact of the recession, the meltdown in the markets that has claimed major financial institutions operating risky business models should serve as a warning to the clubs.

"The financial world has learnt a serious lesson in the last year that living by the old adage, 'If it ain't broke, don't fix it' can lead to catastrophic results," said governing Labor Party legislator Alan Keen, who chaired the inquiry.

"There is a real danger that English football could go the same way. Corrective action needs to be taken now to address serious weaknesses in the governance of the game as well as severe financial imbalances.

"Lack of proper governance and financial instability are the two fundamental vulnerabilities to the success that English football has enjoyed in recent times. Our report includes tough measures to improve the way the game is run and to combat 'financial doping' whereby short term success can be bought at the expense of long term financial stability."

The Premier League already applies a "fit and proper persons" test to rule on prospective English club owners, but the parliamentarians want this extended from judging character to ascertaining whether takeovers will burden clubs with large debts.

The report highlights concerns over the American takeovers of Manchester United and Liverpool.

United had no debts before being bought by Tampa Bay Buccaneers owner Malcolm Glazer in 2005, but now "healthy operating profits... are more than eaten up by the servicing of its debt," the report said.

After winning the Champions League and Premier League last season, United posted pretax losses of 44.8m pounds. The repayments on debts of 649.4m pounds took 45.5m pounds annually out of United's profits.

Likewise, the buyout of Liverpool by Tom Hicks and George Gillett Jr. in 2007 saw debts of 44.8m pounds rise beyond 350m pounds.

While Chelsea's debts are not to external financial institutions, the report said that loans by owners or directors like owner Roman Abramovich should be considered as debt leveraging.

"Owners should not be able to use the clubs' assets to leverage debt," Keen told The Associated Press. "We want sport to be looked upon as different to other businesses."

Keen said the report's concerns were realised Sunday when Manchester United lost in the FA Cup semifinals to Everton after fielding an under-strength team.

"That was a dreadful and very apt illustration of what worries the committee about resources gravitating towards the top clubs," Keen said. "Now there is more evidence of people coming in and loaning vast amounts of money to the clubs in order to try and win something.

"If that leads to reserve teams being put out in competitions that are not as important to them, that will damage the future of football."

Keen's committee believes the Premier League seems more focused on making money rather than helping leagues in developing football nations, whose best players are lured to England.

"We are leeching money from overseas countries," Keen said.

AP

Comments
  • Bob - 2009-04-21 02:11

    I do not think Sir Alex fielded and under-strength side in the FA Cup because the club has a bad business model. When you play an many competitions as United do, going as deep into the knockout stages as they do year-after-year, your squad has to carry the weight of players in need of rest. Since his 17-year-old Italian signing basically ensured the Premiership by getting him out of jail twice in as many games, he probably figured the lad could do it again vs Everton. We might hate United for their success and their arrogance, but that doesn't mean we should lose respect for them by claiming mistakes in the sport are a result of mistakes in the business. Certainly the American owners of both United and the Pool have not kept their noses particularly clean, but by the same token the two sides are the most feared in Europe (barring a poor home performance vs Chelsea in the Champs League by the latter).

  • They are no longer UK football clubs..... - 2009-04-21 07:32

    as it is no longer about the "beautiful game", it's about profit and loss; and it is worrying that club owners use "their" clubs to leverage debt as most clubs field a bigger percentage of foreign players than locals and are owned by the likes of Abramovich and Hicks. Even more obscene are transfer amounts and footballers' pay and it all boils down to chasing the buck. To be fair, football is not the only game - look at the US; the dear souls who started this trend of self-glorification and the commercialisation of sport - very sad!

  • Matt - 2009-04-21 08:40

    Until Fifa itself lets the county that host the world cup profit more then it does from TV rights and sponsorships then they have no right to try medal in club finances. Grow up, these guys bought the clubs with their cash in order to make money, if they don't they will sell the club to the next guy who will try turn it around and make a profit. If you want professional football then you get people trying to make cash

  • Anonymous User - 2009-04-21 13:09

    I think the change(FIFA's "six-plus-five rule") could bring a good change to world football, as the number of good players will no longer be concentrated to Barclays Premier League only, but MLS, Portuguese Liga and French Liga 1 will also have a chance to feature awesome players, hence we'll enjoy football at all levels. There is a huge difference btw watching (Lyon vs Marsielle) and (Liverpool vs. Arsenal), and its all in the concentration of players...hence the latter gets more attention...

  • Anonymous User - 2009-04-23 07:22

    Mons Platini is bitter. If it was spanish, italian, French teams, which has done it for years no problem. The issue only reared it head again because of the very big possibility of 2 EPL teams contesting the CL final. viva EPL viva. the best soccer in the world

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